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Taking the Measure of Outsourcing Providers
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This is an MIT Sloan Management Review article. In an attempt to increase both efficiency and service quality, more and more companies are outsourcing to third-party suppliers some key business processes, such as human resources, information technology, and procurement. The universe of potential suppliers is diverse and growing, made up of locally based specialists, offshore providers with comparatively low labor costs, and global suppliers who are able to apply sophisticated management techniques and technology. The challenge for clients is to understand their own requirements and to identify providers whose capabilities and objectives are best aligned with their particular needs. Draws on extensive research to identify three potentially critical areas of supplier competency: delivery competency, transformation competency, and relationship competency. By benchmarking supplier capabilities against its strategic and operational intent, a company can work to establish relationships that support its business objectives.